A seasoned investor or trader is always able to identify the latest opportunities in the market. This often raises the question – is it possible to open and manage more than just one demat account?
The simple answer to this is – yes, it is possible to open multiple demat accounts, specifically if they are opened with different brokers. This is usually done by seasoned investors or traders who seek to accomplish different investment objectives or fulfil different needs simultaneously. An investor or trader might wish to benefit from both a full-service broker, in terms of personalised solutions or expert advice, and at the same time, he or she would want to enjoy the financial benefit of lower brokerage rates that a discount broker would offer. Moreover, some investors would also like to segregate their investments for practical convenience and therefore open multiple demat accounts with different brokers.
No, there are no legal hurdles or complications of any sort if you wish to open multiple demat accounts. As per the SEBI guidelines, it is only mandatory that you link your PAN card with every demat account that you have opened. You can easily link all your different accounts to your PAN card at one time to ensure that they remain operational. By doing this, all the equities and other securities in the different demat accounts will be considered as owned by you.
The answer to this is – yes, one can open a single demat account and link it to multiple trading accounts. For instance, you can open a Mirae Asset Sharekhan demat account and link it to different trading accounts, even held with different brokers and thus providing different services. Thus, those, who wish to enjoy different advantages and services from different brokers at the same time, would prefer to link their different trading accounts with a single demat account for convenience. However, the only limitation to this course of action is that most brokers do not provide a separate facility for a trading account. They usually combine a trading account with a demat account from the beginning.
No, this is not possible. As per the regulatory guidelines, multiple demat accounts cannot be opened with a single broker only. It is only possible to link multiple trading accounts to one demat account or multiple demat accounts with different brokers to your PAN card and thus authenticate all transactions at the same time.
Those, who open multiple demat accounts, do stand to benefit from certain advantages:
1. Long-term and short-term investments can be segregated effectively.
2. Investments can be segregated basis specific goals.
3. Different investments can be stored in separate accounts for convenience.
4. Investments can be managed more efficiently through different demat accounts.
But it should be remembered that it is mostly seasoned traders and investors who are able to manage multiple demat accounts at the same time. For anyone else, there can be quite a few complications and disadvantages of having multiple demat accounts:
1. Every demat account will need separate AMC charges. This means that there will be a recurring and cumbersome expense to maintain different accounts at the same time.
2. Tracking every demat account can be quite tedious and time-consuming and it is only suitable for those extremely adept with markets.
3. If a demat account remains inactive, it would be frozen or suspended for all transactions. This might happen fairly frequently if there are multiple demat accounts and the trader or investor isn’t adept enough to manage them at the same time.
In conclusion, while it is certainly possible and even advantageous to seasoned traders and investors to manage multiple demat accounts and use them to segregate their investments seamlessly, it isn’t very useful to a relatively inexperienced or casual trader or investor to do the same. Therefore, it is best advised that every trader or investor weighs his or her abilities and priorities before exploring the option of multiple demat accounts.
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